Micro-lending fund for women entrepreneurs on tap for 2016

Published 12:00 am, Sunday, September 20, 2015

David Martin, Dean of the Ancell School of Business at Western Connecticut State University, and Amanda Allen, from the Women's Business Development Council on the WCSU Westside campus on Thursday, September 17, 2015, in Danbury, Conn. The Women's Business Development Council is opening an office on the WCSU Westside campus.

David Martin, Dean of the Ancell School of Business at Western Connecticut State University, and Amanda Allen, from the Women's Business Development Council on the WCSU Westside campus on Thursday, September

David Martin, Dean of the Ancell School of Business at Western Connecticut State University, and Amanda Allen, from the Women's Business Development Council on the WCSU Westside campus on Thursday, September 17, 2015, in Danbury, Conn. less

David Martin, Dean of the Ancell School of Business at Western Connecticut State University, and Amanda Allen, from the Women's Business Development Council on the WCSU Westside campus on Thursday, September ... more

Amanda Allen, from the Women's Business Development Council listens to David Martin, Dean of the Ancell School of Business at Western Connecticut State University, on the WCSU Westside campus on Thursday, September 17, 2015, in Danbury, Conn. less

Amanda Allen, from the Women's Business Development Council listens to David Martin, Dean of the Ancell School of Business at Western Connecticut State University, on the WCSU Westside campus on Thursday, ... more

David Martin, Dean of the Ancell School of Business at Western Connecticut State University on the WCSU Westside campus on Thursday, September 17, 2015, in Danbury, Conn. The Women's Business Development Council, from Connecticut, is opening an office on the WCSU Westside campus. less

David Martin, Dean of the Ancell School of Business at Western Connecticut State University on the WCSU Westside campus on Thursday, September 17, 2015, in Danbury, Conn. The Women's Business Development ... more

David Martin, Dean of the Ancell School of Business at Western Connecticut State University, and Amanda Allen, from the Women's Business Development Council on the WCSU Westside campus on Thursday, September 17, 2015, in Danbury, Conn. less

David Martin, Dean of the Ancell School of Business at Western Connecticut State University, and Amanda Allen, from the Women's Business Development Council on the WCSU Westside campus on Thursday, September ... more

David Martin, Dean of the Ancell School of Business at Western Connecticut State University, and Amanda Allen, from the Women's Business Development Council on the WCSU Westside campus on Thursday, September 17, 2015, in Danbury, Conn. The Women's Business Development Council is opening an office on the WCSU Westside campus. less

David Martin, Dean of the Ancell School of Business at Western Connecticut State University, and Amanda Allen, from the Women's Business Development Council on the WCSU Westside campus on Thursday, September ... more

The team of the Women's Business Development Council from left: Marian Cicolello, vice president; Karen Ham, finance director; Kristen Hogan, marketing and development assistant; Fran Pastore, president and CEO; and Megan Wormser, office assistant; pose in their offices in Stamford, Conn., on Wednesday, Sept. 16, 2015. less

The team of the Women's Business Development Council from left: Marian Cicolello, vice president; Karen Ham, finance director; Kristen Hogan, marketing and development assistant; Fran Pastore, president and ... more

The Women’s Business Development Council is in the process of creating a micro lending institution called WBDC Capital, which will focus on small loans for female entrepreneurs in amounts of $50,000 or less, filling a gap that many business owners cover by racking up credit card debt at higher interest rates.

Founded by CEO Fran Pastore two decades ago and operated as a nonprofit in Stamford, WBDC is also moving its Danbury office to the campus of the Ancell School of Business at Western Connecticut State University. WBDC has a Hartford location, and has been working to make inroads into eastern Connecticut and other parts of the state.

Through its history, WBDC has focused on advising mostly — but not exclusively — women entrepreneurs through workshops and one-on-one consulting sessions, and also helping them secure funding from sources like the U.S. Small Business Administration and more recently the Connecticut Small Business Express loan and grant program created by Gov. Dannel P. Malloy. WBDC Capital represents the organization’s first foray into lending directly to business owners.

“There is no loan fund that is exclusively for women in Connecticut, and there is no loan fund that is exclusively for women in the region,” Pastore said in an interview this week. “This is the first of its kind.”

In winning authorization for a new round of funding for Small Business Express, the Malloy administration set a goal of increasing the number of grants and loans to businesses owned by women, noting just 14 percent of the first installment of Small Business Express went to companies run by women. Speaking at the Women Entrepreneurs Empowerment Forum at UConn Stamford on Friday, Malloy said the state has improved “substantially” the percentage of loans going to women entrepreneurs today.

“We were not hitting the ... target,” Malloy said. “We went back and decided to do more outreach and devote ourselves. ... It’s one of the reasons we worked with the Women’s Business Development (Council).”

Since the eve of the recession in 2007, Connecticut has added 9,400 women-owned businesses, according to a study published in March by American Express OPEN, a 10 percent increase that trailed the rate of growth in New York (25 percent), Massachusetts (19 percent) and New Jersey (15 percent).

Pastore thinks WBDC can improve on Connecticut’s record by making small loans available for startup or operational costs — funding that is scarce at banks, in part due to the small return when weighed against the amount of time it takes to process the loan.

“Nobody wants to do it because it’s not cost-effective,” Pastore said. “You can make a $500,000 loan and it takes the same amount of time and effort as it takes to make a $50,000 loan.”

While working as a local liaison for the Small Business Express program, WBDC staff became aware of a U.S. Treasury Department request for organizations to apply to become Community Development Financial Institutions. Through WBDC’s work on the Small Business Express program alone, the organization knows of 100 women-owned businesses that could use a micro loan, and she expects there are many throughout the state that could qualify.

The Treasury Department issued WBDC a $125,000 grant to develop its lending capabilities, and the nonprofit is in the process of raising money from banks and private investors to form the loan fund. Citigroup and United Bank also chipped in with early support as Pastore and her staff eye a fundraising goal of $3 million within three years.

First loan in 2016

“We’re looking for funding — that’s the biggest message right now,” said Marion Cicolello, vice president of WBDC. “We’ve been told given our reputation it should be easy, but no one’s written us a check yet.”

Cicolello thinks that is at least partly attributable to many businesses still working through their budget planning for 2016. Pastore said the idea is getting legs from philanthropists, women in the arena of private equity investing, and officials like state Rep. Patricia Miller (D-Stamford). WBDC hopes to announce its first investor at an Oct. 23 business forum focused on women’s entrepreneurship, with some 750 people slated to attend at the Hilton Stamford Hotel and Executive Meeting Center.

Pastore hopes WBDC Capital will be able to approve its first loan sometime next year. The fund will not be able to offer better loan terms than a bank, but it will give access to “wrap-around services,” bringing the business owner full support from WBDC resources, she said.

In time, Pastore does not rule out growing the loan fund to $8 million, a size other CDFI lenders nationally have attained.

“We evaluated the risks,” Pastore said. “We’ve been in this business 20 years — it’s a natural next step of our evolution and growth … We know there is a need.”